Thanks, Howard. Good morning, everyone, and welcome to our call. Joining me today are our CEO, Steve Kaufer; and our CFO, Ernst Teunissen. Last night, after market close, we distributed and filed our second quarter 2019 earnings release, and we made available our prepared remarks on our Investor Relations website located at ir.tripadvisor.com.

In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. You will also find supplemental financial information which includes certain non-GAAP financial measures discussed on this call as well as other performance metrics.

Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, August 8, 2019. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements.

And now here's Steve who'll share a few thoughts before we open up the call to your questions.

TripAdvisor remains the world's largest travel community. We have a powerful global offering built on people-powered information and a trusted brand. We help consumers discover, explore and experience the world in unique and compelling ways.

This year, we are operating with enhanced customer focus and we are executing well on a number of initiatives to deepen our customer engagement, grow and serve our members, and deliver travelers a more holistic and seamless travel experience.

We're also laying the foundation for a world-class media business to enable partners to capture more value on our platform, which can enable us to further monetize our significant travel influence.

So first, can you talk about the strategy behind the media efforts a little bit more in detail? The content, particularly on the feed, is improving steadily and we look at that very closely. And also, we noticed that you're launching some new ad units recently. Although it's still in early days, what should we expect to see both in terms of product and also in terms of monetization efforts over the next few quarters that makes this a more sizable business in the next few, say, the next few years?

Sure. Thanks for the question. This is Steve. We first kind of want to remember more than 400 million unique users, and they're almost all on our site looking for a place to go, looking for a place to stay, looking for a thing to do, a place to eat. That's an incredible amount of influence across the travel ecosystem. And as you know, we've monetized through a couple of different vehicles so far in our history, but we really don't feel we've tapped into the opportunity to better understand who these folks are so that we can segment them and offer visibility to these users across all of our endemic clients as well as non-endemic clients.

So you've noticed a couple of different ad units. That's great. You'll see more custom pieces throughout the site. You'll see more native integrated pieces. The feed will be part of that, but I wouldn't guess, as we implement new products, I wouldn't guess that it would be a majority of the new pieces. We're going where we find consumers are at a decision point.

Where can we inspire them -- or where can we help our clients inspire them to go to that location? And then how can we help select the right hotel, the right thing to do for them? All that comes down to new video units, better programmatic capabilities -- our clients can buy easier on our platform, more ad units across all of our devices and, in general, a better targeting ad tech stack that we're already in the process of assembling.

So this is new people, relatively new effort. I should say we have a very nice display and media business, but it's a nice opportunity for us to dramatically grow that using kind of latest technology where we hadn't invested as much before. Compared to some of our peers with our audience size, we see it relatively -- well, we see what we believe to be a fantastic opportunity for doubling this part of our business in the next 3 to 5 years.

Great. And then, Ernst, was the 2Q revenue trends in the HM&P segment a surprise to you at all? How are you thinking about it? And then looking at it in terms of the back half as well, so you're calling out returning to growth in 4Q. Is that primarily from comping through some of the marketing expenses? Or is there any other puts and takes that's going in there as well?

Deepak, the profit growth trend in HM&P was not a surprise to us. We continue to benefit from the optimizations that we've done around our marketing expenses. We saw continued aggressive profit improvement. First half now, we have a total of 31% EBITDA growth in our HM&P segment, and Q2 was very close to the 30% mark. So that was very pleasing and very strong for us.

On the revenue side, we had said that we would continue to see some weakness in the overall revenue line as a result of the marketing pullback. This quarter, we additionally saw some increased SEO trends as well that we focused on. But if you look ahead for the rest of the year, in Q4, we are seeing the segment go back to growth. Into Q1 for next year, we have fully lapped all the marketing -- the reset that we have done. We will be in the position to start growing our paid marketing channels again, and we're forecasting to return to growth on the HM&P segment in that year.

Display is an additional growth driver for the back half. So it's not just comping the paid marketing spend. The display initiatives that Steve was just talking about will start to kick in some extra contribution to our revenue growth as well towards the end of the year is our expectation.

Two questions, if I can. First, can you just talk about the comments in the letter on E&D segment growth tapering and what might be driving that? And where are you in terms of driving bookings through core TripAdvisor versus Viator? Is some of the impact competitive? Or are you kind of done making TripAdvisor kind of fully bookable?

And then second one, just when you talk about slower demand, is that on the consumer side in terms of hotel shoppers or the advertiser side or both? Any comment you can share on trends in metasearch pricing options would be great.

Yes. Lloyd, thank you. First of all, growth for the segment E&D in the second quarter was strong. It was 28%, but excluding the impact of currency, it was 33%. The product, supply and marketing initiatives that we're driving are progressing very nicely. Pleased with that. We're making a lot of investments this year that may not necessarily impact our revenue growth this year, but it's setting us up for longer-term growth on the platform. And as you know, a huge market opportunity across both restaurants and experiences that is very untapped, 80% off-line on the experiences side.

There's a couple of things this year in the revenue trends that we called out before. One is currency. Obviously it's making an impact this half but also in the next half. We've called out before that we're comping some very high growth in our new restaurant products and the restaurant media products business that we built last year, and we're comping against that particularly in the back half of the year. That was a major factor last year.

But also, we had pretty explosive growth on the TA platform for Experiences last year which we're comping into as well. So if you dial back from all of that, we're making huge investments for the growth here -- for the future here. And there's long-term sustainable growth that we're able to capture, we believe. We're playing to win. Not everything is focused on optimizing revenue this year, but we see this as a long-term growth opportunity for TripAdvisor.

And then this is Steve. When you look at the actual, what's going on, on TripAdvisor, there is -- we think we're doing a much better job helping our travelers find the things that they really want to book in advance before they go. We feel there's a lot more headroom there. We're improving our, what we call, our Trips functionality so you can start building more of a trip together. That needs to include and will include abilities to book attractions and tours, those magical moments that are part of the vacation that Trip has. Whether they be things sold on the platform or just the wonderful advice that you can get, it's really that full package for that considered Trip that allows us to shine so well, and Experiences is a vital part of that.

To your second question, Lloyd, about the hotel meta auction, the trends that we're seeing are on the consumer side. So on the supplier side, we've seen consistency in the bidding behavior of our partners. We've seen slower demand in paid marketing, obviously, because we are bidding less aggressively on those search terms and we're getting fewer paid customers in. And on the SEO side, we made a comment that we saw some slowdown.

Others in the space continue to talk more and more about getting more aggressive in the activities and experiences segment. Just wondering if you're seeing any evidence of more competition in that category or not really at this point.

And then also in Experiences & Dining, I realized you're pushing for long-term growth with continued investment in the segment. I believe you've said in the past that you think this segment can have a margin profile that's more similar to HM&P. Do you still believe that's the case? Or is there anything structural that would make that more challenging?

Mike, thanks for the question. This is Steve. The focus -- the way we look at the overall experiences market is that it's really in the beginning. The demand is huge. This is a huge new category coming online. We got in really early. We have a number of other players that are also in the space. But the vast, vast majority of everything going on is still off-line, off-line in the pre-trip phase, off-line in destination, as in someone walks up and buys something. We truly believe all of that or a huge portion of that will migrate online and some of it will migrate online to our app, others for pre-purchase or pre-trip activities.

We're doing our best to invest in all the different areas we need in order to capture more than our fair share of the marketplace. We fully expect all of our competitors to be on the same game plan, and the beauty is there's plenty of opportunity for there to be multiple winners in this category. We think our phenomenal traffic advantage gives us a great opportunity to do extremely well. So between traffic, between supply, between the frictionless booking platform we have now, it all works.

To your second question on margin profile for the business, we're not going to be too specific, but we do believe that the margins in this category do end up looking like hotel margins have evolved to. And so we feel it's a very natural opportunity for our marketplace to consolidate the supply. And we already have huge portion of the demand, and that makes for a great business with a ton of network effects.

Another couple of questions. Maybe on the Hotel side, as you talked about the SEO headwinds, is that -- are the SEO headwinds just limited on the Hotel side? Or is that something you're also seeing on Experiences? Can you just clarify that for us?

And then just based on the commentary, it just seems like if I look at the Hotel's subsegment, you're going to comp the advertising cost in Q1 of 2020. So is that -- when we should expect that subsegment to kind of stabilize or maybe even start seeing positive growth? What's the right way to think about that?

Sure. Thanks, Naved. This is Steve. I'll take the first SEO-related question. And let's start with the context that, of course, we get a lot of SEO traffic across all of our business units. And it's a great way for travelers to discover TripAdvisor and in everything we do. There is an effect of Google and other search engines moving more and more into the travel space, and that's a bit of the Hotel headwind we called out. Of course, it hits all of our business units, but we continue to look at the overall positive of how this traffic finds us, how we're able to educate them on TripAdvisor. And then at some point, if you want, we can go into the rest of the initiatives that we're doing to otherwise drive long-term loyal behavior of our customer base.

To your point -- to your second question, Naved, HM&P and growth in the future, yes, this year, 2019 is obviously a profit-focused year. We've been talking about the significant profits we've been driving. We have progressively throughout 2018 made improvements in our performance marketing. We're now in Q1 and Q2 flat on our returns there. We're happy with our returns. We're lapping into some benefit, but it's a diminishing benefit, and it should start helping revenue and our ability to start acquiring paid marketing again and grow that line. So in Q1 of 2020, we will have fully lapped that, and we will be in a position to start focusing on growth in our paid marketing channels again. So we've called out, in Q4, we are anticipating to go to growth for the segment. And into 2020, we're expecting growth from that segment.

Okay. Just a quick clarification on that. I think on the last earnings call, you spoke about some weakness in auctions in the month of April. It seems like that might have been more advertiser-driven. Can you just give us some more color on how the quarter evolved and if that persisted? Or what are you seeing on your end? It seems like based on data risk out of the 2 large OTAs, their own business seems to be seeing room nights -- at least room nights growth in the double digits. So what are you seeing on your end and how those trends improved since April?

Yes. Naved, what we called out is it's not, from our perspective, an advertiser-driven event. It is more about the demand side, on the one hand, us pulling back on marketing and increasing in efficiency there, which has been an impact and was an impact in Q2, plus the SEO challenges that Steve just talked about. And so -- but we are going to lap through a lot of those changes throughout the rest of the year. And as I just responded, we see us returning to growth for the segment by the end of the year.

A few questions. One, could you please talk about demand trends? You mentioned in the letter that there were softer-than-anticipated demand trends. A little bit more comment on that will be great.

Second, on your membership and loyal customer base. So that is very interesting. You shared some metrics around frequency as well as the ability to generate more revenue than an average user. Could you talk about what you are doing in order to get more members, in order to keep them more engaged and some of the initiatives that you have taken and may take the rest of the year?

And then finally, on EBITDA, thank you for sharing the -- giving some color on double-digit growth rate as well as acceleration in Q4 over Q3 and then back half growth being less than 15%. But could you talk about how you're thinking on investing in the Experiences segment? How should we think about EBITDA in the back half for that segment as you invest?

Sure. This is Steve. Thanks for the question. When we look at membership, we look at the ability to sign somebody up, have them use our app, have them invest a bit in the platform, that might be writing a review. It might be saving a couple of things to a trip that they want to take. We then take that information, customize our CRM and our push notifications to make it highly relevant to what the customer is looking for and then encourage them to return to the site to either finish the booking process they were in the middle of or explore another adjacent activity. You can imagine when there's someone starting on a flight or a hotel, it's a great opportunity to add a thing to do, an attraction, a private tour. There's wonderful upsell opportunities that we'll have going down the road.

Look, job one for us that we've been working on is making sure the messages that we're sending to people are highly relevant. We want to make sure that when they come to the site, we know more about them than just their name and IP address so that we can give great recommendations. That all drives a wonderful value proposition for members. And you combine that with our activity of soliciting membership more and what we're happy to share is we've seen the past 4 quarters have been consecutive growth in our membership numbers, the year-on-year growth of how many new members we had each quarter. And we're on [track] (corrected by company after the call) for the rest of the year. That's just one indication of how we get from the 400 million monthly UUs to a more meaningful set of members who are coming back using us or letting us help them in all of their trips. That's also one aspect of how the demand question gets framed a year from now because we'll have a much more direct relationship with so many more members going forward.

To your second question about the Experiences & Dining EBITDA trends, this is obviously a year in which we're making investments for the future. This is a year in which EBITDA in this segment is coming down year-over-year, fortunately funded by significant EBITDA improvements on the Hotel side. We said before and we maintain that, that although EBITDA will be lower for the segment, we forecast to be positive for the year in the segment. And so going into the second quarter, expect to see additional investment in this segment.

Look, we already covered some of the demand trends. And then I talked about how membership -- I didn't talk much about app download, but that will be another aspect that we're working on and have seen some nice results in order to move this demand to be more in our control.

If you're referring to kind of overall travel demand in the industry, we see a number of different kind of signals out there when we listen to other companies' comments. There's a little confusion out there, but we're seeing a reasonably good travel environment at the moment. So in our prepared remarks, we're not commenting or we're not calling out anything particularly unique in travel that's causing a big plus or a big minus for us. So we're happy with the overall environment and we're executing, we think, well on our journey.

I wanted to go back to the ad platform opportunity. How should we think through the investment ramp and ad tech infrastructure and the sales force as you build out this new initiative? And another big picture one, if I can. I wanted to play devil's advocate for a second. I agree you're under-indexed on media revenue versus peers. However, it's also true that you're more vertical-focused, focused on travel, whereas a lot of those peers, it's either more horizontal in nature. Curious to hear how you think about that and how you think through potential ceilings on monetization.

Sure. Thanks, Justin. I love the questions. So we're fortunate enough to have resources internally on the tech side that we were able to shift over. It includes some licensing and some buys not builds. But I wouldn't phrase it as a big multi-year lift to do this because we already have $150 million-plus business built on a level of targeting and we just need to extend it, make it easier for clients to buy programmatic and then build some additional ad units, particularly video, fast-growing area where we just don't have the product offering. So I would say small tech lift there.

On the sales force side, we're already very global. Of course, we need to add some more folks as we reach into different sets of clients that haven't historically been advertising on our site but love the demographic that we represent. So we're probably pretty well covered in endemic. We feel like there's a lot of opportunity outside of travel with audience targeting, as evidenced by the many other companies out there that do it pretty well.

We are obviously pretty good at taking advantage of the vertical nature of our categories and we move into that transaction as we go. But of all the people that go to TripAdvisor, so many are purely in the research mode and they just are not ready to buy anything. That's a beautiful aspect of our site being up-funnel from many others.

So for the folks that aren't ready to buy, how do we monetize the ability to influence in one direction or another? And that's not a click off to an OTA. That's not a transaction of a private tour. That's a media opportunity to help educate a consumer on all the different stuff that they really should do. So we have a ton of influence in the category. We have a ton of traffic that is looking for something around their trip. And the more information we can get about who those folks are, the better we can do for overall general targeting. I hope that was helpful.

Can you just speak on the new brand campaign, what the key message is going to be? And then can you provide any update on the amount you spent on television this quarter? And then one more, if I can. Any way you can give us some KPIs just around the membership opportunity in terms of percentage of MAUs or how many are converting to members?

Thanks for the question. I'd say that I can't really share the details of the brand messaging in part because it's evolving and in part we're not ready to launch at this point. But I can tell you, it will most likely be focused on aspects that are relatively unique to the TripAdvisor value proposition versus what the other set of travel players can provide. We have done a lot of research on our travelers, the awareness we have in different markets and the irreplaceable value that we provide to so many travelers. So the brand campaign, we expect, will highlight that, delivered in unique and compelling ways across a wide variety of media.

In terms of the spend, we spent $26 million on brand this quarter, which makes really the first half very comparable and spend almost the same as the year before. With all these changes that we're thinking about our brand advertising, it does not mean that we're increasing our budgets for it. So it shouldn't be an incremental spend now or even in the following year. We're doing this all within our existing budget.

No, it would be far too early. What we have going for next year is -- and I want to back up. I wouldn't phrase it as just a television effort because we really do believe that there's a host of different media opportunities available for us. And as the branding rolls out later in the year and the advertising begins probably closer to next year, maybe that will help set your expectations.

I just wanted to dig in a little bit on the SEO headwinds that you guys had called out. Obviously, Google has been moving more aggressively into travel products for a long time now. And I was wondering what may be different in this quarter that warranted a headwind or impacted your business in a more meaningful way.

Sure. So back up, we actually grew SEO traffic in 2018. Though, as I've mentioned many times, it is getting a lot harder due to Google pushing their own products. And by the way, we think it's entirely appropriate for regulators to be looking into this practice. But frankly, we're focused on what we can do about it.

This past quarter, they did a few things on the hotel front which hurt a bit more than usual, but we've been working on a handful of initiatives, some of which we've already covered to counter that for a while. So as we pointed out in the prepared remarks, member growth, app usage, building a stronger direct relationship with the travelers, new branding campaign, these are the sorts of things that we look to drive that deep consumer relationship that, while we love the Google traffic, while we love all search engine and all social traffic as well, we've been implementing, and have more on the horizon, initiatives that enable us to own the relationship in a tighter way.

A couple of questions here. Just want to dig a little bit deeper about the trends in the second half here. Last quarter, you mentioned for the Hotel and Media business, you're expecting growth in the second half, kind of implying third quarter will be growing. I wonder what has changed. Is it more due to maybe the external environment where you see demand overall for travel is weak? Or is it more due to internal decision where you want to cut down marketing expenses as a result of revenues coming down?

And secondly, also on digital advertising, I'm sure you guys know it's obviously a pretty competitive space. And I was wondering, what new products are coming up that you feel confident is differentiated? And does the confidence that you put in this product include the news feed product advertising that we've been talking about the last couple of quarters? And how should we think about the growth rate for Hotel and Media business going to 2020?

I'll start with the first part of the question. So this year has been a year in which growth in our Hotels, Media & Platform business has been impacted by our decision to optimize the marketing expenditure, and that has been a major impact on the growth rates, as we've been calling out throughout, as we believe those will start to abate by the end of the year and fully lapping in the first quarter. So from that, we're expecting improvement. We are seeing growth for the first time to return in that segment in the fourth (corrected by company after the call) quarter, and then we're well set up for the period and beyond. You want to take the second, Steve?

Yes. And so for the media growth opportunity, as I've mentioned, new video ad units, better programmatic access to specific audience, us understanding our own data in conjunction with other data, which I'll just call it more enhanced segmentation allowing advertisers to buy that specific audience that they want, and some of this -- or I might argue, most of this is not actually rocket science. It's just an area that we have not invested in, in the past.

And so with the new level of focus, we've already seen some modest results. We rolled out a couple of additional products. We mentioned there's some other ad products that are in beta now, be able to sponsor a location or sponsor the discovery of a location. And there are just a lot of both untapped media dollars in travel, our endemic category, and then a wide-open opportunity. Of course, we have competition with that opportunity, but we have a ton of first-party data unique to our massive audience at a global scale. And that makes us a particularly nice compelling ad buy for quite a few folks looking for an extremely brand-safe environment.

Yes. As we said, we are expecting to return to growth. It's a little early to be more specific than that. We'll do that in the quarters to come. We obviously have highlighted the various puts and takes there, the return to a more level-playing field around the marketing efficiencies and as well as the ambition we have in the media space, which we believe we can at least double in the next 3 or 5 years.

I just had a follow-up on the HM&P revenue guide. So the second quarter was down, the revenue was down 4% ex currency, and it looks like you're expecting that to grow year-over-year in the fourth quarter. So in the interim, can you talk about how Q3 is looking for HM&P? Do you think it will be better than Q2? Or will you see the full quarter of SEO headwinds making it similar or worse than Q2?

Without putting too fine a point on it, we -- Q3 will be still a quarter in which we will have significantly lower marketing expense, which will be great for profitability, but it's still slowing the recovery of revenue growth. So Q3 will be another quarter in which we experience that. Really, in Q4, we see the more meaningful start of the lap of the marketing performance, and that's why we call out Q4 as the moment where the segment can come to growth.

Okay. Great. That's helpful. And then -- and on that Q4, the confidence there in returning to growth, is that really across the segment? And how much of it is driven by what you anticipate in the display side for the fourth quarter versus really the display and also the TripAdvisor-branded Hotels?

Yes. It's a combination of the increased lapping into the marketing performances that we will see. But also, we have some exciting things in the works on the media side, and we expect positive impact from that in Q3 and more in Q4.

Okay. Great. And just one other just quick follow-up. Talked about the kind of SEO headwinds. It sounds like it started or maybe exacerbated kind of mid-quarter in the second quarter. Have you ever seen SEO-driven revenue down before? Or 2019, would you expect that to be the first year that that's happened?

We've seen our growth rates decelerate over the years, but I've kind of been talking about this for quite a while as Google continues to move into travel. The notion comes back to, with this trend that's been going on for several years, how we take control of that customer -- control is perhaps a bad word, how we help that customer and encourage the relationships so that they continually come back to us.

And with our growth in membership, comes, as we mentioned in our published remarks, the improved repeat rate, the improved monetization and the improved loyalty to TripAdvisor. And so we're particularly excited about the growth in our membership numbers. You should expect more from us in that store, and that helps address a number of the other concerns around the business.

This is Stan for Brent. I was just wondering from what you know so far about your brand spend, is it helping drive more incremental traffic to the platform? Or it's mostly shifting traffic from paid to direct channels?

Thanks for the question. It's hard for us to know that because we're blessed with so much traffic in so many of our points of sale, and our pure branding campaigns tend to be in our larger markets. It's a little hard to -- we know we are getting some additional audience, but the purpose of the campaign was really to drive different behavior of the people who already knew us. And so we've seen consistent improvement in conversion on our things-to-do section on TripAdvisor. Some of that is going to be the brand campaign. Some of that is going to be converted on the site, better implementations, better supply. Teasing out the difference is hard, but we know the brand campaigns have been helping on the TripAdvisor point of sale.

Nothing really to highlight at this point. We see pretty uniform trends across the globe at this point. We called out in the past that we saw some softness particularly in Europe. That has started to converge. So we don't see a particular area, and we see actually the upside from all the initiatives that we are currently deploying in all our markets across the world.

In closing, I want to thank our global travel community because you make the TripAdvisor site better every day, and we will work tirelessly to deliver you great products to help you experience the world. I also want to thank our partners. We will continue to deliver offerings that enable you to drive your business. And finally, I want to thank all of the TripAdvisor media group employees around the world. We have a lot of exciting work ahead.